Wednesday, April 23, 2014


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Russia, Ukraine Sign 10-Year Gas Deal

Ukraine's Yulia Tymoschenko (left) and Russia's Vladimir Putin seal the deal in Moscow.
Ukraine's Yulia Tymoschenko (left) and Russia's Vladimir Putin seal the deal in Moscow.
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(RFE/RL) -- Russian Prime Minister Vladimir Putin and his Ukrainian counterpart, Yulia Tymoshenko, watched with somber satisfaction as a deal was signed that pledges to end a dispute that has left Europe without adequate natural-gas supplies since January 7.

Live television footage showed Aleksei Miller, the head of Russia's Gazprom export monopoly, and Oleh Dubyna, the chief of Ukraine's Naftohaz, signing the deal in Moscow.

The two prime ministers then took their places at the table to explain the deal.

Putin offered few details but promised Russia's European gas consumers that relief was on the way.

"I expect that all [gas] transit in the European direction will resume very soon," Putin said. "Gazprom has been ordered to begin transit in all directions proposed by our Ukrainian partners and to meet the daily order of European consumers."

If gas flows are resumed at precrisis volumes and without further delay, supplies could still take as long as three days to begin reaching European client states within three days.

Naftohaz says it may take only 1 1/2 days to pump gas to its western border once Russia restarts deliveries.

Satisfying Europe, For Now

The dispute threatened to damage the credibility of both Moscow and Kyiv in the eyes of the European Union, which has voiced increasing anger over the gas cutoff.

Perhaps aware of the risk in frustrating Europe further, Tymoshenko promised that the deal would mean stable, reliable gas supplies not only in the short term, but in the decade to come.

"I think it is really a historic moment today -- 10 years of calm and predictable behavior in gas supplies to Europe and Ukraine," Tymoshenko said.

The signing capped a flurry of talks between Putin and Tymoshenko during the past few days.

As of January 18, the two sides had agreed that Ukraine could receive gas with a 20 percent discount from European rates. At existing rates of $450 per 1,000 cubic meters, this means Ukraine could be paying $360 in the near future. In exchange, Moscow could continue to pay transit fees at 2008 rates.

Putin said the deal was so satisfactory to both sides that the presence of international monitors -- brought in to mediate earlier this month after another near-breakthrough in the dispute -- was no longer required.

No details were given about the 10-year nature of the deal. And questions have already arisen about the agreement's solidity.

Tymoshenko's Trump Card?


Ukrainian President Viktor Yushchenko, who was notably absent during the weekend flurry of talks, indicated before the signing he was not satisfied with the terms of the Putin-Tymoshenko deal.

Yushchenko's objection found support from an unlikely source -- Viktor Yanukovych, the leader of the opposition Party of Regions and Yushchenko's former opponent in the flawed 2004 elections that sparked the Orange Revolution that brought him to power.

Yanukovych was quoted as saying the maximum price Ukraine should pay for Russian gas in 2009 is between $230-$250 per 1,000 cubic meters.

The last-minute complaint from Yushchenko and Yanukovych came as Tymoshenko was en route to Moscow to finalize the deal, and momentarily threw the signing in doubt.

In the end, however, Tymoshenko and Putin proceeded unfazed. The day's events may speak volumes about who holds the upper hand in Ukrainian politics as the country prepares for its first presidential elections since the Orange Revolution.

Tymoshenko has made no secret of her ambition to serve as president, and securing a successful deal with Russia could prove a useful tool in any future campaign.

The deal also foresees the elimination of "intermediaries" -- an apparent reference to RosUkrEnergo, the shadowy middleman company that is co-owned by Gazprom and a small group of Ukrainian businessman.

Many of the disputes between Russia and Ukraine over gas shipments in this and past years have been blamed on RosUkrEnergo.

Several other aspects of the Russian-Ukrainian dispute also appear unresolved for now. They include issues like who is responsible for providing the "technical gas" needed to start up and maintain proper pressure in the pipelines.

Ukraine and Russia have each said the other should be responsible for providing the technical gas. Putin at one point suggested that the EU should pay for the technical gas as a stop-gap measure and figure out the proper billing later.

Also unsolved, for the time being, is the question of Ukraine's outstanding gas debt to Russia -- estimated at $3.2 billion at the start of 2009.
Tangled Web
Many sections of Ukraine's gas-pipeline system date back to the Soviet era and make it difficult to precisely control gas flows.

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